Sterner Insurance Agency - Apple Valley, MN
952-432-1111 - Business, Commercial, Auto, Home & Life Insurance, Apple Valley, Minnesota Apple Valley, MN
Business/Commercial Auto Insurance
Sterner Insurance Agency - Apple Valley, MN - Your Business Auto Insurance Experts
As a businessowner, you need some of the same insurance coverages for the cars, trucks, vans or other vehicles used in your business as you do for vehicles used for personal travel.
Your Businessowners Policy (BOP) does not provide any coverage for vehicles, so you must have a separate policy.
Most states require you to purchase liability insurance for bodily injury and property damage that may result from a vehicle accident occurring while you or someone from your organization is driving on business. Many states also require you to have uninsured/underinsured motorists coverage and/or medical payments coverage (known as Personal Injury Protection (PIP) in some states). You can also purchase physical damage coverage for vehicles your business owns, leases or hires.
Do I Need a Business Auto Policy?
Your insurance agent will ask in detail how you use vehicles in your business; who will be driving them; whether you own, rent or lease; and whether you and your employees are likely to be driving their own cars for your business. The answers to these questions will indicate the types of coverage you need.
Will My Personal Auto Policy Cover Business Use?
Your personal auto policy provides coverage for some business use of your vehicle. Similarly, your employees’ personal auto policies cover some business use of their vehicles too.
A personal auto policy is unlikely to provide coverage, however, if the vehicle in question is used primarily in business. It will not provide coverage for any vehicle owned by a business. The personal auto policy, whether yours or your employee’s, may not have enough coverage to protect your business.
For example, imagine you are driving your car to a business meeting while having an intense conversation on your cell phone with one of your sales reps. By the time you notice a van ahead of you has stopped to make a left turn, it’s too late to avoid a collision. The driver and five passengers are injured in the accident. They sue you and your company.
What Vehicles Are Covered?
The scope of coverage in the business auto policy can be either broad or narrow, depending on your choice of options. It could, for example, be written to apply only to one specifically described auto. Or, as an example of very broad coverage, the policy could be written to apply to the named insured's liability exposures arising out of the use of any auto.
In general, you have three options for which vehicles you choose to cover.
Autos Your Business Owns
Most businesses should buy the third type, since that is the only coverage that protects the business from liability when an employee or owner is driving a personal vehicle on business.
Be Sure the Right Insured Is on the Policy
An insurance contract usually requires that the owner of a vehicle be named in the policy "Declarations" as the “principal insured.” If you drive any of the same vehicles for both business and pleasure, make sure you tell your insurance agent who holds the vehicle’s title, you personally or your company. This will avoid problems if you need to file a claim or a claim is filed against you.
Physical Damage Coverage
The three types of physical damage coverage for motor vehicles are collision, comprehensive and specified perils.
If your businesses has a large fleet of vehicles, over time, it may be more costly to insure the fleet for physical damage than it is to retain the risk, that is, pay for any physical damage directly rather than by insurance.
Regardless of how many vehicles your business has, it may be cost effective to carry physical damage coverage only on the newer or more valuable vehicles.
What Will the Insurer Pay for Physical Damage?
The amount an insurer will pay on an auto physical damage or theft claim depends on the market value, known as Actual Cash Value (ACV), of the vehicle at the time of the loss. The most that will be paid is the lesser of the ACV or the cost to repair or replace the vehicle with one of like kind and quality. In the event of a total loss, the ACV is adjusted for depreciation and the vehicle’s physical condition. Thus, the older the vehicle and the worse its condition, the more its value has depreciated and the less the insurer will pay.
The liability portion of the BACF obligates the insurer to pay all damages the business is legally obligated to pay because of bodily injury or property damage caused by a covered vehicle, up to the policy limits.
How Much Liability Coverage Does My Business Need?
Many insurers recommend a business auto coverage limit of $1,000,000, with $500,000 as the minimum. The higher limit does not add a great deal to the premium, considering the amount of additional protection it provides.
What is a Combined Single Limit (CSL)?
Unlike personal auto policies that have separate limits for bodily injury and property damage liability (split limits), the BACF commonly has a Combined Single Limit (CSL). This creates higher limits for both bodily injury and property damage coverages, including per occurrence limits. Although you can purchase other limits, the most common commercial automobile CSLs for a small business are $500,000 and $1,000,000.
Does a Business Umbrella Cover Autos?
If you have a business umbrella policy, it would provide protection for owned, hired and non-owned autos, if the umbrella shows the auto liability policy as an underlying policy for which it provides coverage.
What Coverage Do I Need if My Employees Use Company Vehicles for Personal Business?
Some businesses let employees drive company vehicles home and use them for personal purposes in the evenings or on weekends. So long as these vehicles are scheduled on your business auto policy and the appropriate “coverage auto symbols” are shown on the "Declarations" page, you have coverage for owned autos taken home by employees.
Employees’ own personal auto policies will not cover their use of a company car unless the car has been specifically borrowed as a temporary replacement for the employee’s own car while it is unavailable. In addition, employees who lease, hire, rent or borrow autos for their personal use are not covered by their employer’s business auto policy.
When Your Business Vehicle Is Also Your Personal Vehicle
Sometimes employees or executives of a company or other persons who are supplied with a vehicle owned by the company have only that vehicle. They do not own a personal vehicle nor do they obtain personal automobile coverage. The BACF does not cover personal use of the vehicle in this situation. To close this coverage gap, you need to add the Drive Other Car Coverage Endorsement to your BACF. This provides insurance while the named individual or a member of his or her family is driving a car borrowed from a third party.
What Coverage Do I Need if Employees Drive Their Personal Vehicles on Business?
If your employees drive their own cars for business purposes—to visit clients, for example—your business could wind up liable for property damage and bodily injuries resulting from a traffic accident for which an employee was at fault.
Sometimes businessowners don’t notice they have this exposure. Consider these scenarios:
These are all situations where a business can find itself liable for an auto accident with damages higher than the policy limit of the employee’s personal auto policy.
To protect your business from these liability risks, you can add the Non-owned Auto Liability Endorsement to your BACF. It provides coverage when employees drive their own vehicles on business. This BACF coverage is excess over the limits provided by the employee’s personal auto coverage. If the employee’s limits are low—such as only to satisfy state financial responsibility limits—then it is critically important for the business to have this non-owned auto protection.
You Are Liable if You Allow a Bad Driver on the Road
You are legally liable when you allow someone to drive one of your vehicles. If you fail to take reasonable steps to determine that the driver is qualified to drive or if you allow someone to drive whom you know has a poor driving record and that person causes an accident, you could be liable for negligent entrustment. Any damages awarded for negligent entrustment would be on top of liability for the accident itself.
A case of negligent entrustment arises when someone allows another person to use a vehicle knowing or having reason to know that the use of the vehicle by that person creates a risk of harm to others.
Your organization is responsible for verifying a driver’s qualifications before entrusting him or her with a vehicle. Do not entrust a bad driver with a vehicle—not even for a quick errand.
Keeping Premiums Down
The best way to keep your BACF premiums down is to avoid accidents. Driving safety should be emphasized. Drivers should not be so pressured to produce that they feel compelled to drive unsafely. All vehicles should be well maintained.
Ask your agent whether your insurance company has business auto safety resources that you can use to help your organization be accident free. For more information on reducing the risk of auto accidents, click here.
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